FM Nirmala Sitharaman says corporatisation and not privatisation of defence: What is the difference?

With an aim to become Aatmanirbhar Bharat and boost ‘Make in India’ initiative, finance minister Nirmala Sitharaman has announced that the government will corporatise defence and not privatise it.

The next step is to improve autonomy, accountability in ordnance factories. "We will corporatise the ordnance factories. Do not mix this with privatisation. Furthermore, FDI will increase from 49 per cent to 74 per cent," she added. There will also be a time-bound procurement when it comes to defence.

The minister added it is important for critical industries like defence to be self-reliant. She added there is a need for high-end technology among the armed forces. “India shall now notify — in consultation with the department of the military — a list of weapons that will not be imported, but are made in India,” the union minister asserted.

"We will start the list this year and build the list every year," Nirmala Sitharaman said, adding that indigenisation of imported spares will be done by us. The government has provided a budget for domestic capital procurement to reduce the import bill when it comes to buying weapons from other nations.

Corporatisation is the process of transforming government agencies into corporations. In this process, the state-run institutions will be restructured which will allow companies to function in a structured manner while the government retains majority ownership in the corporation. In short, one can say, it is the imposition of corporate values or practices without giving the institutions in the hands of private players. This practise is expected to allow the government to raise funds by floating an initial public offering (IPO).

Meanwhile, privatisation means the transfer of a company or organisation from the control of government to private ownership and control.